| Between 2000 and 2003, Herman Miller Inc., the 82-year-old office furniture maker, went into what Don Goeman, executive VP of research, design and development, calls a free fall. As the dot-com bubble burst, sales plummeted by 40 percent to $1.3 billion and the company slashed its full-time employee ranks by 60 percent.
In this environment, most companies would think about nothing beyond the next quarterly earnings statement--if not just about the day-to-day concerns of keeping afloat. Herman Miller, however, has historically taken a long-term outlook.
In the middle of the downturn, the company launched a new compensation system, which for the first time pegged pay directly to individual performance, including behaviors tied to the company’s values. Over a two-year period Herman Miller also invested $500,000 in a new program to groom 40 future leaders.
"We looked ahead and saw there would be a time when the economy would turn around and people would be looking for the best employees and willing to pay big bucks for them," says Linda Milanowski, Herman Miller’s director of learning and development. "Companies always say how much they value employees, but that doesn’t mean much unless you put your money where your mouth is."
In 2002, Herman Miller launched the Leading Edge Work Team Leader Program, a one-stop location for nearly all development material on the corporate intranet. Anyone in the company could sign up for the course work. It also began its Leadership Development Program, a special two-year initiative for 40 high-performance or high-potential employees at the vice president or director level. The program was designed to create foundational leadership skills based on principles from the book The Leadership Challenge.
The following year the leadership program expanded the initiative to some workers at lower levels. "During a time of downsizing, people really notice that you care and continue to invest in their careers," Milanowski says. In that two-year period, the company spent $1 million for overall leadership development.
"We knew there was talent in the organization," says Raymond Bennett, a leadership development consultant at the company. "We didn’t know where it was."
As with every effort, Herman Miller approached training from the perspective of an economic measuring system called Economic Value Added. It shifts the focus from budget performance to long-term improvements and the creation of economic value.
This philosophy has resulted in the fine-tuning of a host of human resources programs. In years past, for instance, managers decided on raises by dividing a set sum among their staff.
"There was no direct correlation for why one person got a 2 percent raise and another got 4 percent," Milanowski says.
That was corrected with the new system, in which people are evaluated half on agreed-upon objectives for the year and half on their skills and behaviors that link to company values.
Herman Miller is the winner of the 2005 Optimas Award for Competitive Advantage for demonstrating that employee participation is a core value.
Workforce Management, March 2005, pp. 44-46 -- Subscribe Now!